By Frank Harty
Some wellness experts advise that a truly effective wellness program must include real incentives and penalties to induce active participation – and medical examinations to gauge employee progress. For quite some time, we at Nyemaster have been warning that one of the risks associated with an aggressive wellness program is a potential violation of the Americans With Disabilities Act. In particular, we have been cautious when evaluating incentives provided to employees for participating in a wellness program when the incentives are premised upon the employee undergoing a wellness exam.
In a lawsuit filed in Wisconsin on August 20, the EEOC alleges that an employer sponsored wellness program violates the ADA because the program’s physical examination component is an illegal medical exam. See EEOC v. Orion Energy Systems, CV 1:14-cv-01019 (ED Wis.). The ADA proscribes employee physical exams unless they are consistent with business necessity. Medical exams that are part of a wellness program are allowed under the ADA only if they are “voluntary.” In the lawsuit, the EEOC argues that the wellness program at issue was not truly voluntary because the penalty for refusing to participate was so steep that the employees had no real choice. In that case, the employer allegedly shifted the entire cost of health insurance to employees who refused to participate in the wellness program.
Employers commonly entice employees into participating in wellness programs by offering discounts on the employee’s contribution to the cost of health insurance. Rewards such as discounts are, under the analysis used by the EEOC, the same as penalties for refusal to participate. The key question is whether the incentives are so substantial that the reasonable person has no choice but to participate. Although some state and federal laws contemplate this practice of providing incentives and contain “safe harbors” to guide employers, there is no safe harbor built into the ADA.
Employers should be cautious when creating wellness programs with penalties and incentives for submitting to medical exams. They should also watch carefully as this area of the law unfolds.